Burma: Economic Sanctions

1 CRS Report for CongressPrepared for Members and Committees of Congress burma : Economic Sanctions Larry A. Niksch Specialist in Asian Affairs Martin A. Weiss Specialist in International Trade and Finance August 3, 2009 Congressional Research Service7-5700 RS22737 burma : Economic Sanctions Congressional Research Service Summary On October 19, 2007, President George W. Bush issued Executive Order 13449. This followed a September 25, 2007 statement by President Bush that Sanctions against burma , which have been in place since 1997, would be tightened to specifically target leading Burmese officials and impose additional financial and travel Sanctions . This report provides background information on existing Economic Sanctions against burma and possible options to expand Sanctions . It will be updated as events warrant. burma : Economic Sanctions Congressional Research Service Contents Future Options to Expand 8 Tables Table 1.

2 Summary of Economic Sanctions on burma .. 5 Contacts Author Contact Information ..10 CRS-5 he following table provides summary information on existing burma Sanctions . Table 1. Summary of Economic Sanctions on burma Statutory Action Sanction Exemption Executive Order 13047, May 20, 1997. Issued under Section 570 of the Foreign Appropriations Act, 1997 ( 104-208) Prohibits new investment in burma by persons and companies on or after May 21, 1997. New investment is defined as a contract with the Government of burma or a non-governmental entity in burma for the development of resources located in burma , purchasing a share of ownership in a project, or entering into an agreement that provides for a participation in royalties, earnings, or profits from the Economic development of resources located in burma . companies with investments in burma prior to May 21, 1997, and companies or persons with an investment agreement in place prior to May 21, 1997.

3 The exemption includes the corporation UNOCAL and its investment with the French corporation Total in natural gas exploration and pipeline offshore and across burma into Thailand. It is estimated that the project provides $400 million to $647 million to the Burmese government annually. (Seekins, Donald M. burma and Sanctions : Punishing an Authoritarian Regime. Asian Survey, May-June 2005. p. 452.) 108-61, Burmese Freedom and Democracy Act of 2003, July 28, 2003. Extended by 108-272 and 109-39. Requires the President to ban the importation into the United States of certain products of burma , beginning 30 days after the date of enactment. The import ban expires in one year unless renewed. The President may impose a freeze on funds or assets in the United States of the Burmese Government and individuals who hold senior positions in that government.

4 Requires the government to vote against the extension of any financial assistance to burma by international financial institutions. Authorizes the President to deny visas and entry into the United States to former and present leaders of the Burmese government or the Union Solidarity Development Association (a pro-government mass organization). The President may waive the prohibition on the import of any product from burma if the President determines and notifies the appropriate congressional committees that to do so is in the national interest of the United States. Executive Order 13310, July 28, 2003. Issued to implement 108-61. Blocks property and property interests of persons listed in the Annex to the Executive Order and persons designated by the Treasury Department as being senior officials of the Government of burma and the Union Solidarity and Development Association.

5 Authorizes the Treasury to designate individuals or entities that are owned or controlled by, or acting on behalf of any of those officials or groups. Bans the importation into the United States of products of burma and the export or re-export of financial services to burma by persons. Prohibits a person or company from approving, aiding, or supporting a foreign party s investment in burma . Prohibits persons from purchasing shares in a third-country company if the company s profits are predominantly derived from the company s development of resources in burma . Transactions prior to May 21, 1997, between a person or company and any entity in burma , but such transactions with banks in burma must be conducted through a bank. No prohibition on the export of goods and services other than financial services. Exemption for transfer of personal remittances of less than $300 to and from burma for an individual ordinarily resident in burma , provided that the funds are not being sent by, to or on behalf of a blocked party.

6 The Office of Foreign Assets Control can issue licenses to non-government organizations to engage in humanitarian or religious activities in burma . T CRS-6 Statutory Action Sanction Exemption Executive Order 13448, October 19, 2007. Grants the Treasury Department expanded authority to designate for Sanctions individuals responsible for human rights abuses as well as public corruption, and those who provide material and financial backing to these individuals or to the government of burma . Section 489(a)(1) of the Foreign Assistance Act of 1961, as amended. burma is listed by the Department of State as a major illicit drug producing country and is subsequently barred from receiving some foreign assistance. Narcotics Control Trade Act (19 2491-2495) and the Customs and Trade Act of 1990 ( 101-382). Due to its designation as a major drug producing state, burma is subject to several trade Sanctions including: (1) deny to any or all of the products of that country tariff treatment under the Generalized System of Preferences, the Caribbean Basin Economic Recovery Act [19 2701 et seq.]

7 ], or any other law providing preferential tariff treatment; (2) apply to any or all of the dutiable products of that country an additional duty at a rate not to exceed 50 percent ad valorem or the specific rate equivalent; (3) apply to one or more duty-free products of that country a duty at a rate not to exceed 50 percent ad valorem; (4) take the steps described in subsection (d)(1) or (d)(2) of this section, or both, to curtail air transportation between the United States and that country; and/or withdraw the personnel and resources of the United States from participation in any arrangement with that country for the pre-clearance of customs by visitors between the United States and that country. Executive Order 13464, April 30, 2008. Froze assets in the United States and prohibited firms from doing business with three Burmese companies : Myanmar Pearl Enterprise, Myanmar Gem Enterprise, and Myanmar Timber Enterprise.

8 CRS-7 Statutory Action Sanction Exemption 110-286, Tom Lantos Burmese JADE Act of 2008, July 29, 2008 Bans the import of jadeite and rubies mined in burma and jewelry containing jadeite or rubies made in burma . Exporters of jadeite, rubies, and jewelry from other countries to the United States must act to prohibit inclusion of articles from burma ; must maintain full records of non-Burmese articles and controls from mine to final finishing to export. Governments must establish dissuasive penalties against persons who violate laws and regulations against trade in Burmese-origin articles. The President shall appoint a Special Representative and Policy Coordinator for burma . The State Department shall submit to Congress reports on countries and entities that supply arms and intelligence aid to the Burmese government; and countries and foreign banks that hold assets of senior Burmese officials.

9 The Act expresses the sense of Congress that the investors in the Yadana natural gas project (including the firm, Chevron) should consider voluntary divestment over time if the Burmese government fails to reform politically; and the investors should publicly disclose their role in the investment and the amount of financial support to the Burmese government generated by the Yadana project. 111-42 Renewed 108-61, The Burmese Freedom and Democracy Act of 2003. Source: Compiled by the Congressional Research Service. burma : Economic Sanctions Congressional Research Service 8 Future Options to Expand Sanctions In response to the Burmese government s suppression of demonstrations at the end of September 2007, the Bush Administration published a large number of names of persons and companies connected with the Burmese government, imposed bans on their travel to the United States, and froze their financial assets in the United States.

10 Existing Sanctions against burma may be viewed as adequate and as necessitating no further action. However, Members of the 111th Congress may seek to exercise additional options. 110-286, the Tom Lantos Block Burmese JADE Act of 2008 struck provisions in the House version of the bill that would have prohibited United States persons from entering into Economic -financial transactions, paying taxes, or performing any contract with Burmese government institutions or individuals under Sanctions . The prohibition of the payment of taxes specifically included the payments of taxes to the Burmese government by the Yadana natural gas project, in which the corporation, Chevron, is a major partner. These stricken provisions were replaced in the final bill by a sense of Congress statement that Chevron and the other foreign investors should consider voluntary disinvestment from the project.